Commission opens in-depth State aid investigation into past co-operation between Slovak Post and SWAN

The European Commission has opened an in-depth investigation to assess whether the initial co-operation and framework agreement between public postal services provider Slovak Post and mobile network operator SWAN was in line with EU State aid rules.

In 2015, Slovak Post, a state-owned company, and SWAN signed a co-operation and framework agreement. Under the agreement, Slovak Post (i) sold and promoted SWAN products and services in its offices and branches all over Slovakia; (ii) provided customer services to SWAN customers, including the operation of a call centre; and (iii) collected fees and payments from SWAN customers. SWAN remunerated Slovak Post for these services. This initial co-operation and framework agreement was in place from 2015 to 2021.

The Commission’s investigation

In December 2016, the Commisison received a complaint alleging that, as a result of the co-operation and framework agreement with Slovak Post, SWAN benefitted from State aid incompatible with the internal market. In particular, the complainant claimed that:

The agreement conferred an economic advantage on SWAN because the fee paid by SWAN to Slovak Post for the provision of services did not represent the market price for such services.
The selection of SWAN by Slovak Post as co-operation partner was not based on a transparent and non-discriminatory selection procedure.
At this stage, based on its preliminary assessment, the Commission has doubts as to whether the initial co-operation and framework agreement was in line with EU State aid rules. For this reason, the Commission has decided to open an in-depth investigation to assess whether:

The decision by Slovak Post to conclude an agreement with SWAN could be imputable to Slovakia.
The terms of the agreement granted SWAN an economic advantage. In particular, the Commission seeks to clarify whether the agreement was concluded in terms that a private operator would have accepted under normal market conditions.
The process for the selection of SWAN was transparent and non-discriminatory and the criteria used objective.
The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation provides Slovakia, the complainant and interested third parties, including the alleged beneficiary of the aid, an opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.

Background

According to Article 107(1) of the Treaty on the Functioning of the EU, a measure constitutes State aid if the following four cumulative conditions are met: (i) the measure has to be granted by Member States through State resources; (ii) the measure has to confer a selective economic advantage to certain companies, (iii) the advantage has to distort or threaten to distort competition, and (iv) the measure has to affect trade between EU Member States. A measure taken by a public undertaking is not directly imputable to the State. For this reason, it is necessary to determine whether the public authorities can be regarded as having been involved in adopting such measure.

Public interventions in favour of companies do not constitute State aid when they are made on terms that a private operator would have accepted under market conditions (the market economy operator principle – MEOP). If this principle is not respected, the public interventions may involve State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the EU, because they confer an economic advantage on the beneficiary that its competitors do not have.